Question

What does change in (PV) present value mean to a company?

Answer 1

Change in the present value will have a greater significance for the company as-

A. It has the the capability of increasing and decreasing the profits of the companies.

B. change in the present value would be impacting the cash flows of the company and it would hence impact the liquidity of the company

C.change in the present value can also impact the solvency of the company because if the present value has to go down significantly then the company would not be able to pay the project related cost and the creditors will be trying to enforce themselves.

D. it can also be having a contagian effect because one project is having impact on the another project and net present value of one project increasing or decreasing will be impacting the another project.

E. It will also be defining the restructuring of various processes of the organisation because there would be the relations arising from actual performance to the standard performance.

F. There should be e changes in the approach of risk management of the company because of fluctuation of the present value.